I meet with seniors that own a house and are seriously considering getting a reverse mortgage or at the very least, are curious about them. “Is this a good option for my situation?” Can my home get foreclosed on with a reverse mortgage? Whose home is it truly after I get a reverse mortgage? Those are all excellent questions and supply a starting point to learn more about this loan. Other areas of life have benefits and drawbacks. Reverse Mortgages aren’t any different. In order to aid you in your fact gathering quest I have included a bunch of information for you.
Take a look at these other pages: Casa Mobile Home Park, West Sacramento Trailer Park, West Sacramento, Broderick
The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Additional cash flow guaranteed through the Federal Government which continues so long as your home is your primary residence. You can learn more about reverse mortgagesĀ here.
As long as there is equity in the home, depending on your initial qualifications and growth, you could make changes to the way you access the homes equity. The unused portion of the Credit line increases monthly at 1.25% over the current rate. An excellent choice for retirees who would like to stay in familiar surroundings and in the same area where they have lived for years.
Relocating can result in emotional turmoil for many elderly home owners. Memories were created inside your “home sweet home”, and close proximity to loved ones and remaining in your community could be a better option.
Get rid of your monthly mortgage payment and pay off those stubborn credit cards and other debt. There aren’t any out of pocket costs aside from the appraisal fee and HUD counseling. Some HUD counseling companies may waive the charge.
You’ll be able to stay in your home no matter what is owed on your Reverse Mortgage. You may never be forced out of your home as long as your real estate taxes and homeowner’s insurance are paid and as long as you maintain your home.
You can only refinance into another reverse mortgage if you’re getting a 5 to 1 ratio. To qualify you have to get access to $5 of equity for every $1 of cost for the new loan.
You can’t ever owe any more than the property is valued at.
Your assets may not be attached to pay off the mortgage debt, additionally, the debt does not pass to your heirs or your estate. The house represents the debt (non-recourse loan).
There are numerous nice options with this home loan like the fees are limited and interest rates are capped.
Can be a financial tool to help beneficiaries avert some of the real estate tax.
Your beneficiaries may be able to claim the interest from your mortgage on their own income taxes after your passing. (Be sure to speak to your tax advisor for advice.)
Now, those are the pros. Pretty easy, right? Sure, the dutiful old loan officer always gives you the good parts, but there are some things that may be drawbacks to Reverse Mortgages. Here are the cons:
The Negatives of Reverse Mortgages:
They can and quite often are more expensive than a traditional mortgage loan. However, you can’t really compare them as they are different loan products.
You might not leave much if anything for your heirs with a reverse mortgage. A Reverse Mortgage really is a rising debt loan because you are not making mortgage payments. It’s the opposite of a standard mortgage where equity will increase as mortgage payments are paid.
You’ll typically net more money from the sale of your home than you’ll with a reverse mortgage.
These refinancing options definitely don’t seem sensible if you are intending on moving in the future.
In the event that you don’t pay your taxes or insurance the lender may foreclose on your home.
If you are not residing in your primary home for a period exceeding Twelve continuous months, the Reverse Mortgage will become due. (Nursing homes, assisted living, moving, etc.)
Medicaid may be affected, and you may not be entitled to benefits unless of course you spend down your Reverse Mortgage proceeds every month. (Check with your attorney and Medicaid for info.)
When NOT to get a Reverse Mortgage:
If you happen to just need short term access to cash and capital.
{When your major intention is fixing up your home, a community grant may work much better.|For those who just need to add a roof, windows or other energy efficient options. If that is the case, subsidies and assistance may be available. Go here for more reverse mortgage information.
If you know you are likely to be moving into an assisted living facility in the very near future.
When your family says you ought not get a reverse mortgage, listen to them and have a meaningful discussion with them and the loan officer, together.
If you have other options such as moving in with friends and relations or the ability to spend money on senior living facilities.
If you are using the home or property for agriculture.